PACRA Maintains Entity Ratings of Allah Tawaqal Metals (Pvt.) Limited

Allah Tawaqal Metals (Pvt.) Limited ("ATM" or "the Company") is engaged in recycling copper and aluminum ingots, sourcing scrap from global markets and exporting finished products primarily to China’s automotive sector. The Company benefits from Pakistan’s growing scrap metal recycling industry, which has expanded significantly following China’s 2017 restrictions on imported scrap. During FY24, ATM expanded its production capacity through the installation of an additional furnace, raising total capacity from 38,000 to 43,000 metric tons. Capacity utilization remained stable at ~73%. In the first half of FY25, the Company recorded revenue of PKR 4.79bln, reflecting a 4.4% decline compared to the same period last year. Export sales decreased by 7.5% due to softer demand from international buyers, while domestic sales increased by 14.0%, driven by higher local consumption and favorable market conditions. The gross profit margin remains stable to 10.8% (6MFY25) from 10.3% in 6MFY24; however, the net profit margin declined to 3.2% from 4.7%, primarily on account of higher operating and financing costs. The Company maintains a moderate leverage profile, with a debt-to-capital ratio of 26.4% as of December 2024. Short-term borrowings stood at PKR 722mln, marginally higher than the previous year, primarily used to fund scrap imports. Interest coverage strengthened to 3.4x, supported by Free Cash Flow from Operations of PKR 216mln. ATM remains a family-owned and operated entity. The governance framework is evolving, though the absence of independent directors and formal board committees remains an area for improvement. While the Company has secured environmental clearance from the Punjab Environmental Protection Agency and is actively pursuing ISO certification, timely completion of statutory audits and improvements in the frequency and timeliness of financial reporting are areas that require attention. Additionally, maintaining a stable and experienced management team remains critical to support operational and financial continuity.
The ratings reflect the Company’s sound business and financial profile, supported by stable operations and a demonstrated ability to generate consistent revenues, which provides headroom for potential upward rating movement. However, governance-related weaknesses continue to constrain the overall rating profile, particularly delays in financial reporting and limited board independence. Enhancing the timeliness and quality of financial disclosures, strengthening board oversight, and formalizing succession planning will be important to support any improvement in the rating. Ongoing compliance with environmental requirements and effective management of commodity price volatility will also remain key considerations in the rating outlook.

About the Entity
Allah Tawaqal Metals (Pvt.) Limited is a private limited company incorporated in Pakistan on September 11, 2019, under the Companies Act, 2017. The Company is family-owned, with shareholding distributed among three members: Mr. Muhammad Sameer Arif (CEO, 34%), Mr. Muhammad Muneeb Arif (33%), and Mr. Muhammad Umair (33%).